Use a revenue projection to estimate the backlog of revenue available to support the profit plan labor budget. Estimate revenue from hourly or DPE (time and material) projects as a percentage of fixed-fee revenue. Classify revenue by billing type so the proportion of hourly/DPE to fixed-fee type can be determined. Base the computation on the percentages developed from the reference budget (prior year's actual) entered in the profit plan.
There are timing differences between when revenue is produced and when billed. Consider the timing differences when reviewing the revenue projection and manpower requirement. The manpower computation shows the manpower required to produce the available revenue at the profit plan target billing rate and planned firm-wide utilization rate. The revenue projection and manpower requirement shows when revenue is inadequate to support the profit plan staff level. The projection also shows when available manpower may be too low the produce the available revenue. Use the revenue projection and manpower projection to keep the marketing plan and human resources plan in balance. Take timely, decisive actions to keep the profit plan on target.